Given the following data: Selling price per unit $ 2.00 Variable production cost per unit $ 0.30 Fixed production cost $ 3,000 Sales commission per unit $ 0.20 Fixed selling expenses $ 1,500 The break-even point in dollars is:

Break-even point (dollars)= $6,000

Explanation:

Giving the following information:

Selling price per unit $ 2.00

Variable production cost per unit $ 0.30

Fixed production cost $ 3,000

Sales commission per unit $ 0.20

Fixed selling expenses $ 1,500

To calculate the break-even point in dollars, we need to use the following formula:

Break-even point (dollars)= fixed costs/ contribution margin ratio

Fixed costs= 3,000 + 1,500= 4,500

Unitary variable cost= 0.3 + 0.2= $0.5

Break-even point (dollars)= 4,500 / [(2 - 0.5) / 2]

Break-even point (dollars)= $6,000

in 2001, dell computer became the world’s largest personal computer vendor, continuing to

gain market share and post profits in an industry struggling with slumping sales and billions of

dollars in losses. dell sells 90% of its pcs directly to the final customer, largely bypassing the

reseller channel that accounts for most of the world’s pc sales. this direct customer relationship

is the key to dell’s business model, and provides distinct advantages over the indirect sales

model. dell’s direct relationship with the customer allows it to tailor its offerings to customer

needs, offer add-on products and services, and use the internet to offer a variety of customer

services. in addition, dell’s pcs are built to customers’ specifications upon receipt of an order,

giving dell additional advantages over indirect pc vendors who must try to forecast demand and

ship products based on those forecasts. dell’s direct sales and build-to-order model has achieved

superior performance in the pc industry in terms of inventory turnover, reduced overhead, cash

conversion, and return on investment (kraemer, et al., 2000).

explanation:

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